San Francisco Mayor Gavin Newsom is holding a "work day'' at SFO, where he will find out up close and personal how the airport works. He's starting his day with a ride on BART, and will tour and get some hands-on experience at various airport operations. Event on 3/17/04 in San Francisco. CHRIS HARDY / The Chronicle

Photo: CHRIS HARDY

San Francisco Mayor Gavin Newsom is holding a "work day'' at SFO,...

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The lines form early at check cashing stores in San Francisco on the 1st and the 15th of the month. General Assistance checks are cashed with each recipient getting about $190. By Brant Ward/Chronicle

It's been thrown out in court and revived again, demonized by some and longed for by others. And now today, two years after San Francisco voters overwhelmingly passed the Care Not Cash initiative to slash welfare payments to the homeless in exchange for housing, the city's great experiment in transforming how it treats its most desperate citizens will finally take effect.

But most homeless people won't notice - at least at first.

The program is being phased in so slowly that, for most of the 2,500 homeless people getting welfare checks, there will be no change this week. Or even next month. But the change is genuine, and it marks the start of a new, although confusing, era for the city's homeless.It works like this:

Until today, homeless people on welfare have been getting monthly checks as big as $410 -- the highest in the state -- with the option of spending some or all of it on rental rooms for a few weeks a month.

Now, that option has been removed.

As of today, whenever city welfare officials have a shelter bed or a permanent room available, it will be offered to a homeless person. His or her monthly welfare check will be cut to as low as $59, whether he or she takes the room or not. But if the person takes it, the rent for the entire month will be paid by the city. The offer will be made only to people who have been on a long waiting list for housing, or during the semiannual sessions a homeless person has with the welfare office to determine how much his or her payments should be. As a result, some people will be able to keep the existing higher level of payment until Halloween. This all means the only homeless people being affected today are those signing up for welfare for the first time, those coming off waiting lists or those whose six-month reassessment time has come. That is only expected to amount to a couple of dozen people.

Mayor Gavin Newsom, who wrote Care Not Cash and rode its popularity into the mayor's office last winter, understands this all may be confusing.

But just to reassure himself of his plan's potential, in the past four months he has quietly visited shelters, logged himself into the homeless fingerprinting system to see how it works and inspected residential hotels getting ready to take in Care Not Cash recipients.

Now he says he is more certain than ever that the homeless will be better off.

"It's the beginning of change in San Francisco," Newsom said. "We expect it to go smoothly, but if we make mistakes, I will be the first to own up to them. And we will probably make mistakes.

"But we will try to do this with wisdom and compassion. And we will be working in a cooperative environment the likes of which we haven't seen in a long time here."

Indeed, the consensus of business interests, social service providers and city poverty-aid officials does seem to be stronger than at any time in recent memory, with dozens of erstwhile opponents uniting to help a city committee draft a 10-year plan to end chronic homelessness.

But that doesn't mean skepticism has disappeared.

Allison Lum, a leader of the Coalition on Homelessness, still hates Care Not Cash, and she was hoping a lawsuit that successfully diluted it last year would be upheld by the state appeals court in San Francisco. When that court instead restored Care Not Cash to its full strength on Friday, she viewed it as a triumph of politics over compassion.

"This gives homeless people less money to live on and nowhere near enough housing to take them," she said. "It's stealing from them, really. It's an outrage, and the court just made it worse."

The coalition plans to protest the program at City Hall today at noon.

Slowly and surely, the city expects Care Not Cash to cut the homeless welfare rolls in half by the end of the year, to about 1,200, as recipients move indoors or leave the city. The cash being cut from the checks will be diverted to a special fund to create more housing and counseling services -- and next year, city officials hope that fund will grow to at least $10 million.

For Exhibit A on how bright the future might be, officials point to two rehabilitated old residential hotels opening today with a total of 154 rooms to take Care Not Cash recipients.

The McAllister Hotel near City Hall and the Graystone Hotel near Union Square are shining models of the latest in thinking among social welfare experts about how best to help the nation's homeless get off the streets: supportive housing. They are designed to be safe havens of clean rooms, with counselors on hand to help people with whatever drug, alcohol or mental problems pitched them into the street.

The approach already has met with great success in New York, Philadelphia, Chicago -- and even San Francisco.

The trouble is, there aren't enough of these hotels. Yet.

San Francisco has an estimated 8,600 to 15,000 homeless people, about 3, 000 of whom are "hard core" -- meaning they have a galaxy of mental, drug or other problems that keep them on the street. And right now, the city has only about 2,500 supportive housing rooms, between the 1,000 administered by the city and another 1,500 offered independently by nonprofits.

He anticipates Care Not Cash will fund 939 new supportive housing units by year's end. Newsom also is proposing a multimillion-dollar bond for the November ballot to pay for supportive housing, and whatever chronic homelessness plan the 10-year committee drafts by summer will probably attract new federal supportive housing grants.

"Care Not Cash is only part of the solution," said Rhorer, executive director of the Department of Human Services, which oversees welfare. "We have to approach the problem from as many different angles as we can -- but the approach has to lead to housing first, with services, no matter what."

One of the main sticking points of Care Not Cash is that it is so confusing.

There are four categories of welfare -- single adults with no special conditions, people looking for work, the elderly and the disabled -- and exactly how they lose their cash is a riddle few outside the welfare offices seem to be able to answer, despite many citywide seminars all winter to explain it.

Nobody could be more eager to find out what's ahead than the homeless. And many can't wait to get their hands on a room key.

"I'll take one of those rooms in a hot second," Pete Jensen, 43, said at the welfare office last week.

Jensen, whose blond goatee was as tidy as his brown T-shirt and slacks, has been sleeping at a church shelter for two months, ever since he got medication for his bipolar and manic depressive mental illnesses. He has been getting the full $410 monthly welfare check given to homeless people looking for work, and even though he has four months to go before being re-evaluated under Care Not Cash, he said he would leap the line if he could.

"Man, they have counselors right there in the building, it's a clean place to live -- let me in, right now," he said.